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21 April 2016AmericasShirley Liang

What Canada can learn from SPCs in Europe

To ensure for the public the safety and efficacy of drugs, such products are subjected to a rigorous and generally lengthy regulatory approval process before marketing authorisation (MA) is available. Furthermore, the extensive testing, including pre-clinical and clinical studies required to support a MA application may take a number of years.

At the same time, the term of patent protection is calculated from the application filing date regardless of when MA is granted for the corresponding pharmaceutical product. Therefore, by the time such a product actually comes to market, a number of effective years of patent protection have been ‘lost’.

Recognising the need to counteract this unique gap in patent protection with respect to pharmaceutical products, in the early 1990s the EU introduced supplementary protection certificates (SPCs).

For “medicinal products” that have received MA, SPCs provide a period of additional protection beyond the expiry of the corresponding patent in specific circumstances. “Medicinal product” is defined in the EU legislation on SPCs as “any substance or combination of substances presented for treating or preventing disease in human beings or animals and any substance or combination of substances which may be administered to human beings or animals with a view to making a medical diagnosis or to restoring, correcting or modifying physiological functions in humans or in animals”.

The nature of protection provided under SPCs has been described as sui generis because it extends only to the active ingredient (or combination of active ingredients) of a medicinal product and is therefore generally narrower in scope than the original patent.

To qualify for an SPC, the active ingredient (or combination of active ingredients) must:

(a) Be protected by a valid patent that covers the active ingredient(s), a process to obtain the active ingredient(s), or an application of the active ingredient(s);

(b) Have receivedMA to be placed on the market as a medicinal product, where the authorisation is the first authorisation; and

(c) Not have already been the subject of a SPC.

The duration of SPC protection is equal to the period that has elapsed between the filing date of the patent application and the date of first MA, reduced by a period of five years. However, this is subject to a five-year cap (or a five-and-a-half-year cap where the paediatric extension applies).

As a result, an SPC, together with a patent, has the potential to provide a maximum of 15 years (or 15-and-a-half years) of protection from the date a qualified “medicinal product” receives its first MA in the EU.

The situation in Canada

Pharmaceutical products in Canada face a similar gap in patent protection but, unlike in the EU, do not currently enjoy any potential extensions to the period of patent protection. Under the Canadian Patent Act, an invention may be granted patent protection for a term of 20 years, beginning on the date of filing of the application.

However, similar to what happens in many jurisdictions, the regulatory process in Canada is likewise onerous and time consuming. In particular, innovative pharmaceutical companies must file a New Drug Submission (NDS) with Health Canada, where the safety, efficacy and quality of the drug is assessed.

“Canada’s commitments under the Comprehensive Economic and Trade Agreement and the Trans-Pacific Partnership represent a significant step towards SPC-like protection in Canada.”

An NDS must be supported by information and data obtained from extensive research and development, including preclinical and clinical studies. In addition, the drug review process by Health Canada is itself long and stringent. A 2011 report by the Canadian Intellectual Property Council (CIPC) observed that the time required for a drug to go from the laboratory to market in Canada may account for a large portion of the 20-year patent term, leaving only a few years of effective market exclusivity.

The CIPC report went on to recommend that Canada should implement a five-year patent term restoration (PTR) system, finding that PTR “is required to offset regulatory delays in the approval of medicines” and that “the complete absence of PTR in Canada discourages investment, job creation and early adoption of new medicines that bring innovation to the Canadian healthcare system”.

This recommendation was supported by another 2011 study, by law firm Norton Rose, which concluded that “slower Canadian drug approval times as compared with the EU makes a strong case for implementing PTR in Canada”.

However, efforts to bring SPC-like protection to Canada, such as a PTR system, have been met with strong opposition from generic pharmaceutical companies, which take the position that any extensions to patent terms will harm consumers by exposing them to monopolistic prices during delayed generic competition.

In response to the above-noted CIPC report, the Canadian Generic Pharmaceutical Association commissioned a critique, which concluded that, when viewed as a whole, Canada’s existing intellectual property regime “already confers several advantages on pharmaceutical patentees that, in many cases, more than offset the absence of a PTR regime”.

The critique also cited factors such as a potential increase in costly litigation relating to pharmaceutical products and patentee abuse of the approval process (such as strategically delaying approval) as militating against the adoption of any PTR regime.

In 2013, the Canadian Centre for Policy Alternatives published a briefing paper disputing earlier conclusions that Canada’s drug approval process is slower than is the case in the EU.

In view of the historical antagonistic positions within the pharmaceutical sector, Canada’s commitments under the Comprehensive Economic and Trade Agreement (CETA) and the Trans-Pacific Partnership (TPP) represent a significant step towards SPC-like protection in Canada.

CETA and the TPP

CETA is a trade agreement covering a number of aspects of the trading relationship between Canada and the EU, including IP protection. Article 20.27, chapter 20 of the final CETA text, titled “Sui generis protection for pharmaceuticals”, sets out the basic structure of the additional protection to be provided for pharmaceutical products protected by eligible patents. This appears to be consistent with the current SPC regime in the EU, with a few exceptions for Canada.

Specifically, article 20.27 requires the provision of “a period of sui generis protection in respect of a product that is protected by a basic patent in force” when the following conditions have been met:

(a)   The product has been granted MA to be placed on the market as a pharmaceutical product, where the authorisation is the first authorisation; and

(b) The product has not already been the subject of a period of sui generis protection.

“Product” is defined as “the active ingredient or combination of active ingredients of a pharmaceutical product”.

“Basic patent” is defined as “a patent which protects a product as such, a process to obtain a product or an application of a product, and which has been designated by the holder of a patent that may serve as a basic patent, as the basic patent for the purpose of the granting of sui generis protection”.

However, this protection may be denied where the first application for MA is not submitted within a “reasonable time limit”.

Regarding the duration, a two-year cap will apply to any sui generis protection in Canada, as opposed to the five-year cap for SPCs in the EU, according to the technical summary published by the government of Canada.

Further, the period of sui generis protection may be reduced “commensurate with any unjustified delays resulting from the inactions of the applicant after applying for the MA, when the holder of the basic patent is the applicant for MA or an entity related to it”. The technical summary also provides that “exceptions have been negotiated to allow for Canadian-made generic medicines to be exported during the period of additional protection”.

It is expected that CETA will be signed in 2016 and enter into force in 2017. Completion of the legal review of CETA was announced on February 29, 2016.

The TPP is a trade agreement between 12 countries: Canada, Australia, Brunei Darussalam, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam. Article 18.48 provides for “patent term adjustment for unreasonable curtailment”, requiring each party to “make available an adjustment of the patent term to compensate the patent owner for unreasonable curtailment of the effective patent term as a result of the marketing approval process”.

However, unlike CETA, no further details are provided on a specific framework. The technical summary published by the government of Canada does, however, state that the TPP provisions are “in line with outcomes secured” in CETA and “will have the necessary flexibility to allow Canada to retain its export exception and two-year cap on additional protection”.

The TPP agreement is currently under review by the Canadian government, which includes continued consultations with Canadians and a full parliamentary debate to fully evaluate the merits of the TPP and whether it should be ratified in Canada. The agreement was officially signed on February 4, 2016.

It remains to be seen what the legislation implementing Canada’s above-noted obligations under CETA and the TPP will ultimately look like. In this context, many lessons may be learned from the EU’s more than two decades of experience with SPCs, including issues concerning the scope and term of protection.

At the end of last year, the European Commission published a call for tender for a study to review the current SPC regime. While the outcome of this study may not be available for some time, it will undoubtedly provide helpful insights for Canada as it begins to give shape to its own SPC-like regime.

Shirley Liang is a life sciences IP lawyer in Toronto, Canada. She can be contacted at: shirley.liang11@gmail.com

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